Income tax basic concepts

He files his return of income even if his taxable income is less than Rs.

basic income tax knowledge

Whereas, in indirect taxes, the person who pays the tax, shifts the burden to the person who consumes the goods or services. Tax rates vary widely. Alternative taxes[ edit ] Some jurisdictions, particularly the United States and many of its states and Switzerlandimpose the higher of regular income tax or an alternative tax.

Every assessee is a 'person', but every person need not be an 'assessee'.

income tax introduction

We want to build income taxes into our framework of the economy, so it would be nice if we could decide on a simpler way to represent the tax code. It consists of three main pillars i. It is safe, but the Interest Income from it is taxable. Withholding for employees is often referred to as "pay as you earn" PAYE or "pay as you go.

Income tax slab

However, the whole amount will be taxed if the value exceeds the prescribed limit. At this point, the power of the circular flow of income will take over, and the level of income and output in the economy will increase even further. Taxes are the main source of revenue for the government. Nearly all jurisdictions require those paying employees or nonresidents to withhold income tax from such payments. It includes value of Benefits and Perquisites. As such it is known as Financial Year. Calculating Tax Payable On your Taxable Income, tax slabs or rates are applied and final tax payable is calculated.
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Basic Concepts of Taxation